A busy year ahead - Oberoi Realty :: HDFC Securities

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A busy year ahead
Oberoi Realty’s (OBER) 3QFY15 revenues of Rs 2.2bn
were ahead of our estimate of Rs 2.0bn owing to
higher than expected bookings from Exquisite, the
only residential project under revenue recognition.
Consequently, APAT of Rs 792mn was ahead of our
estimate of Rs 740mn.
OBER is set for a busy 2015 with the launch of four
new projects that will spur volumes and cash flows
from 4QFY15 onwards. In Dec-14, Oberoi has done a
prelaunch of the Prisma project at JVLR (0.27msf with
91 units with ticket size of Rs 40-60mn) that has seen
a decent response with bookings of 24 units worth Rs
1.3bn. Further, OBER has launched its Mulund project
(3.2msf) on 14th Jan, 2015 across four towers having
configurations of 3-4 BHK at BSP of Rs 12,250/psf
with ticket size of Rs 22.5-45mn. Our channel checks
indicate that the project has seen strong bookings of
~275 units (~550 units launched) worth ~Rs 8bn on
the launch date itself.
Further, the Worli project has seen a soft launch and
the Borivali project is expected to be launched in
1HFY16E that provides visibility on cash flows over
the medium term. With a strong pipeline of launches,
OBER is well placed to ride a recovery in the Mumbai
property market. Announcement of fresh leasing of
office space at Commerz II property (50,000sft) is an
additional trigger. Hence, we reiterate our BUY
rating with FY16E NAV of Rs 328/sh.
 Delayed approvals remain a near term risk :
Although large residential projects in Mumbai no
longer require an environmental clearance (EC) from
the Central Ministry of Environment and Forests
(MoEF), developers still need to approach the
Maharashtra State Expert Appraisal Committee (SEACII,
for Mumbai) to obtain an EC and then get a
Commencement Certificate (CC) to begin construction.
However, with no SEAC-II Committee being
reconstituted in Mumbai since Jun-14, OBER will need
to wait for an EC for both its Mulund and upcoming
Borivali launches, even though it would have received
Intimation of Disapprovals (IoDs) for both projects.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010791